Becoming a first-time landlord in Philadelphia can be a means to building your financial asset portfolio. However, there is a lot to learn about becoming a Philadelphia rental property owner, and it is not uncommon for first-time landlords to make many mistakes. The best way to avoid mistakes is to do your research and learn as much as possible about being a landlord in Philadelphia.
It is incredibly beneficial to know that there are several rules and laws in place to help landlords provide adequate, safe, and healthy living environments for their tenants. Knowing what these regulations and expectations are for you is beneficial and crucial when becoming a landlord.
Avoiding Mistakes as a First-Time Philadelphia Landlord
Maintain all required licenses and certifications
Knowing what licenses and certifications you need to be able to legally own rental property is important. These include.
Rental license/housing inspection license: This is mandatory before collecting rent or filing for eviction notices. If you have no license, you are not legally allowed to collect rent from tenants, and it inhibits your ability to evict tenants. Should you need to at some point. It is important not only to obtain these licenses, but to also make sure that it stays current and renewed.
Certificate of rental suitability: This certificate needs to be provided to tenants before they move in within 60 days. It confirms that the unit meets basic safety and maintenance standards for rental.
Lead paint certification: This is required for properties built before 1978. It is required disclosure and certification to prove to the city and tenants that the home is safe.
- Commercial activity license
- Partners in good housing handbook given to tenants
- Bedbug disclosure/pamphlet
Make sure to screen tenants properly and fairly
Finding responsible and great tenants can be a challenge, especially if you are unsure of the parameters you are allowed to use as a landlord. Landlords need to follow the renters’ access act. This shares written screening criteria upfront and helps tenants to apply consistently and avoid automatic denial based solely on history.
Verifying income is also a smart move in screening tenants. This helps a landlord to ensure that a renter can afford the rental fees expected and communicated in the rental contract.
Documenting everything in the rental screening process is in your best interest to defend against fair housing claims that a tenant or potential tenant may make should they disagree with your decision about renting. Failing to screen tenants can lead to challenges in finding a tenant who will take the responsibility of being a good tenant seriously. Meaning taking care of the property and being dependable with rent.
Use a strong lease agreement
The stronger and more communicative your lease agreement is, the better it will protect you and your potential tenant. Making sure to communicate all of the lease terms and what happens should a lease term be broken in clear and thorough language will help you to have a smoother process should something be violated in the lease or during move-in and move-out.
Know maintenance and code compliance
When you are the legal property owner and landlord renting to someone, you are the one responsible for keeping the property in a safe and livable condition. There are some daily tasks that the renter will need to do to maintain the property, but major repairs and safety issues are the responsibility of the property owner. Making sure that you know all of your responsibilities for what you need to provide in your home, as far as a well-maintained property, is incredibly important. You want to make sure that your property is in code compliance and that you are providing everything expected of a landlord in the condition of the property.
Insurance
Making sure you have the proper insurance coverage for your rental property is also crucial. You want to protect your investment, which also protects you and can help to protect a renter. You want to make sure that when you are formulating your business plan and putting together projections for profit, you budget in proper insurance costs for your rental property. Additionally, you want to make sure that you do not skimp on insurance coverage and have the proper coverage for the property type, and that it is an investment property and not a primary residence.
Budgeting for property management
Whether you decide to be the property manager or you hire someone, it will require budgeting. Not just budging money, but also budgeting time. This will take oversight even if you hire someone to manage the property for you. You will still need to check in with the property manager, which will take time. You will need to build a relationship with a reliable property manager that you can trust to take care of the property well and represent you well to the renter. If you decide to become a property manager, this can take a significant amount of workload and time. Many first-time landlords do not consider the factors of being the property manager, needing to hire one, and having to budget for that cost.
If you are considering becoming a landlord in Philadelphia and shopping for potential Philadelphia rental properties, it is good to work with a real estate agent who is experienced in the area of purchasing rental properties for their clients.
If you are ready to begin searching for homes in Philadelphia, I am happy to help. The team at Victory Real Estate and I are highly experienced. We are a boutique Philadelphia real estate agency dedicated to the specific needs of every client.
“Leron is by far the best realtor I had ever worked with, he is very experienced, knowledgeable, and a true professional, he did great from the minute he listed two of my properties all the way thru the closings, if you want to buy or sell or manage your properties, talk to Leeon, and it will be done in the most professional manner“.-Review of Victory Real Estate